Monday, August 14, 2017

While fossil fuel giant Chevron still refuses to pay its $12 billion environmental judgment to the indigenous groups it poisoned in Ecuador, company CEO John Watson apparently has found the time to try to impose a massive $32 million liability on the solo human rights lawyer who beat his company in court.

As background, it is undeniable that Harvard Law grad and American human rights advocate Steven Donziger did something so extraordinary to hold Chevron accountable for its environmental crimes that Watson decided to launch a crusade against him. Working against huge odds with a team of Ecuadorian rainforest leaders and local lawyers, Donziger spent eight years (2003 to 2011) coordinating the litigation in Ecuador against Chevron over the deliberate dumping of billions of gallons of chemical-laced oil waste into the rainforest. The case took place in Ecuador at Chevron's insistence and the company accepted jurisdiction there.

After overcoming Chevron's repeated attempts to sabotage the proceeding, a court in 2011 found the company guilty and imposed a $19 billion judgment that was halved when a punitive damages penalty was struck. (The amount is now $12 billion because of interest.) It is without doubt the largest environmental judgment in history from a single court case. Chevron's toxic dumping in Ecuador decimated indigenous groups and caused an outbreak of cancer that has killed or threatens to kill thousands of innocent people. Locals call the catastrophe the "Amazon Chernobyl; this photo essay by acclaimed journalist Lou Demettais captures the brutal human cost of what can only be described as a deliberate act of industrial homicide.

The Ecuador trial-level decision against Chevron -- based on voluminous evidence including 105 technical evidentiary reports -- was affirmed unanimously by two separate appellate courts in Ecuador, including by the country's Supreme Court. Not even Chevron disputes that it dumped the toxic waste or that it was the exclusive operator of the oil fields. But to evade paying the judgment from its preferred forum, Chevron tried to cover up its criminal misconduct.

Chevron hired 60 law firms and roughly 2,000 lawyers and investigators in part to cook up fake evidence to file a "racketeering" (or RICO) case against Donziger, Ecuadorian lawyer Pablo Fajardo, community leader Luis Yanza, and all 47 of the courageous villagers from the affected area who stepped forward as class representatives. As part of its intimidation model, Chevron General Counsel R. Hewitt Pate promised the indigenous groups and their lawyers a "lifetime of litigation" if they persisted.

Part of that model was to retaliate against Donziger personally back in New York federal court in an unprecedented collateral attack on a foreign judgment. Another Chevron goal was to use the retaliation case to try to intimidate lawyers and supporters of the villagers with the threat of harassing lawsuits. Chevron also peddled its false narrative from the case to the financial markets to distract from the Ecuador liability and to prop up the company's stock price.

A distinguished member of two bar associations, Donziger is a solo practitioner who along with environmental groups such as Amazon Watch and shareholder activist Simon Billenness has driven the accountability campaign against Chevron for over two decades.

Described as a man of "Herculean tenacity" by Bloomberg, Donziger is also known for creating a new human rights funding paradigm that has allowed the impoverished indigenous groups of Ecuador to sustain their case for years against one of the world's richest companies. The private financing model alone surely terrifies Chevron. Fossil fuel companies are not used to their victims being represented by top-flight litigators like Canada's Alan Lenczner or Brazil's Sergio Bermudes, who are trying to seize Chevron assets to force it to comply with the rule of law and pay the judgment.

If Chevron's so-called "retaliation" case against Donziger and the Ecuadorians was designed to silence their campaign, it obviously failed. Left with little to show for its massive expenditures on RICO given that the villagers are successfully enforcing their judgment in Canada -- with the Canada Supreme Court already ruling in their favor -- Chevron is now trying to "punish" Donziger back home. (For more on Chevron's difficulties in Canada from the Ecuador liability, see here.)

Chevron's attacks only serve to underscore the extent of the bullying approach being used. In fact, it is no less than staggering to see the extent of Chevron's cowardice in the context of its attacks against Donziger and the Ecuadorian indigenous groups. These attacks happened after Chevron sold off all of its assets in Ecuador as the evidence against it mounted.

Chevron generates revenue at roughly $200 billion per annum and pays its top lawyers at the firm Gibson Dunn $1,500 per hour; Donziger lives and works out of a small apartment in Manhattan while most of his clients are lucky to make $200 monthly. When Donziger and the villagers challenged Chevron's claim that the entire Ecuador lawsuit was "sham" litigation, the company dropped part of its claim to avoid producing internal documents related to its toxic dumping. (See here and here for articles Donziger has written about the case of the indigenous groups against Chevron.)

After having sued Donziger for roughly $60 billion, Chevron dropped all damages claims on the eve of trial in what can only be described as a bombshell retreat to avoid a jury of impartial fact finders. While that move took away any remaining legitimacy from Chevron's bogus case, it did allow the proceeding to be tried alone by a pro-corporate judge (Lewis A. Kaplan) who repeatedly made comments from the bench that the villagers interpreted as racist. Chevron also hired the corporate espionage firm Kroll to spy on Donziger while deploying at least 114 lawyers to fight him in court.

Under the U.S. Constitution, anybody sued for money damages has the right to a trial by jury. By dropping its damages claims out of fear Donziger would defeat its lawyers before a jury, Chevron bailed on the main part of its case to leave the dirty work to Judge Kaplan. One of Kaplan's first moves was to exclude the scientific evidence of pollution used to convict Chevron in Ecuador.

Judge Kaplan also prevented Donziger from telling his side of the story in open court as part of a series of rulings that seemed more in sync with a judicial apparatchik in Putin's Russia than a neutral federal judge. For a comprehensive summary of how Chevron made a mockery of justice in Kaplan's court, see here and read Donziger's appellate brief. Prominent attorney John Keker also accused Kaplan of showing "implacable hostility" toward Donziger and allowing the matter to "degenerate into a Dickensian farce" unworthy of any civilized country.

Chevron also used the Kaplan proceeding to unveil a new corporate playbook: invest massive sums to try to weaponize the American civil justice system to flog those holding it accountable. Chevron issued subpoenas to more than 100 environmental activists, bloggers, and academics who had some connection to the Ecuadorian communities. Yet at bottom Chevron had nothing other than a series of procedural complaints about the conduct of the Ecuador trial that already had been either corrected or rejected by Ecuador's courts.

With virtually nothing to work with, Chevron's lawyers became so desperate that they paid an admittedly corrupt Ecuadorian witness at least $2 million in cash and benefits to lie in Kaplan's court. That witness, Alberto Guerra, claimed Chevron lost the case because Donziger had arranged for a bribe to be paid to the trial judge so that his Ecuadorian legal team could "ghostwrite" the judgment. Guerra's claims have been thoroughly debunked by scientific evidence and rejected by three layers of courts in Ecuador, and by two appellate courts in Canada. Guerra later admitted under oath that he had lied repeatedly on the stand before Kaplan.

Chevron CEO Watson and his besieged General Counsel R. Hewitt Pate still stand by the fake "bribe" story. They pump millions of dollars of company funds into the Gibson Dunn law firm to propagate the core falsehood. Kaplan also refuses to set aside his ludicrous decision that the Ecuador judgment was obtained by fraud even though Chevron's case has fallen apart, potentially exposing the company and its lawyers to criminal liability.

The campaign against Donziger has become such an obsession to Watson and his management team that it threatens a serious blowback. Watson and Pate essentially have bet their jobs on the RICO case given the massive investment of resources in fabricating false evidence and attacking the human rights community. Major Chevron investors are furious and shareholder resolutions connected to the Ecuador liability have received widespread support in recent years.

Given that Chevron caved when it came time to test its evidence before a jury, the company is now trying to paralyze Donziger on the back end by insisting he pay the company $32 million to cover a small part of its legal fees in creating the sham allegations. The effort is a clear violation of the RICO law and the Constitution, as this court submission by Donziger points out. Simply put, there is no legal authority for Chevron to collect legal fees after it fabricated evidence and denied its adversary a jury.

In what can only be described as a situation that evokes shades of modern-day Russia, the same pro-Chevron judge in the U.S. (Kaplan) who already refused to hear evidence that Chevron defrauded the court to frame Donziger now gets to hear the motion to force Donziger to pay Chevron's fees for the work of its lawyers in framing him. That's not how the rule of law is supposed to be administered in a society with an independent judiciary.

(If you think the Russia comparison is inapt, read about a Russian lawyer named Magnitsky who was framed by multiple judges with fake evidence when he uncovered a massive tax fraud a few years ago. The book Red Notice by the American Bill Browder is the best account.)

A retaliatory legal action so petty and desperate from one of the world's largest corporations against a brave lawyer who stood up to Chevron's 2,000-person team would be hard to find in the history of America. The attacks against Donziger decidedly will not help Chevron diminish its growing risk from the Ecuador judgment. And we will see if the beleaguered Chevron legal team at Chevron's outside law firm of Gibson Dunn -- which had marketed itself as a "rescue squad" to save Chevron from the Ecuador liability -- will be able to survive its growing reputation as a serial ethical violator and fake fraud-producer for clients guilty of scandalous behavior.

Besides confronting a fading a business model in a world transitioning to clean energy, there is little doubt Chevron and other oil companies collectively face more than one trillion dollars of unbooked liability for causing environmental damage over many decades. The Ecuador judgment could be the first of many to come. Hence, the massive expenditures to try to kill off the Ecuador case continue.

Donziger and the Ecuadorian villagers have a $12 billion judgment against Chevron. If Chevron succeeds in obtaining a $32 million judgment against one lawyer who has little chance of paying even a small fraction of it, so be it. Anyone keeping score realizes that Chevron is getting devastated.

Chevron's latest attack on Donziger also underscores that bullying often trumps serious merits-based litigation at the highest levels of the fossil fuel industry. Chevron's attempts to defame its victims will not play well in Canada in the upcoming trial to enforce the Ecuador judgment. Chevron has an estimated $25 billion of assets in Canada or more than enough to pay the entirety of the amount it owes to the people it harmed in Ecuador.

The Canada trial likely will result in a remediation paid by Chevron of a humanitarian disaster that never had to happen. Now that it has, Chevron needs to stop presenting fake evidence to courts and cheating the people it poisoned in Ecuador.

Tuesday, August 1, 2017

When is Bloomberg going to finally wake up and fire reporter Paul Barrett for his overall crappy reporting and his repeated bias in favor of Chevron in its scorched-earth campaign to evade paying the $12 billion Ecuador environmental judgment?

The latest example of Barrett's gutter-level pro-business "reporting" comes from a Bloomberg article last week about the latest attempt by a major corporation with environmental problems to use the RICO (or "racketeering") statute to try to intimidate and silence its activist adversaries. The article details how Resolute, a Canadian timber company, has accused Greenpeace of being a "global fraud" after the organization claimed the company was trying to destroy the Boreal forests in Canada.

Let's get this straight: Greenpeace is in the right (see this great video for its version of the case) to accuse Resolute of poor environmental practices. But even it was wrong, does that give a corporation the right to use RICO to claim Greenpeace is like the mob for calling it out?

For that matter, does the RICO statute which was passed by Congress to target the mob give corporations the right to try to sue Greenpeace or any other organization out of existence for exercising its First Amendment speech rights? That's what some corporations and their cheerleader-reporters like Barrett seem to think.

What Barrett should be writing about is how an increasing number of corporate litigation counter-attacks against activists and human rights lawyers are becoming a real threat to our democracy and to free expression. For background on this dangerous global trend, see this compelling blog by Otto Saki of the Ford Foundation and this analysis by Katie Redford of Earth Rights International. These important perspectives are absent from Barrett's reporting.

Now, to Barrett's bias in favor of his favorite oil company Chevron. In the latest article, Barrett tries to artificially give the shaky Resolute lawsuit some heft by comparing it to the RICO judgment Chevron obtained against American lawyer Steven Donziger and his Ecuadorian clients who won a historic $12 billion judgment against the company after it had dumped billions of gallons of toxic waste into the Amazon, decimating indigenous tribes and causing an outbreak of cancer.

(See here for a summary of the overwhelming evidence against Chevron in the Ecuador case and here for the peer-reviewed studies showing high cancer rates in the affected area.)

In the RICO case, evidence demonstrates that Chevron fabricated evidence of a judicial bribe by illegally paying its star witness, Alberto Guerra, a $2 million bribe in exchange for his false testimony. The case fell apart after trial after Guerra admitted he lied repeatedly on the stand and a forensic analysis of the Ecuador trial judge's computers proved he wrote the judgment, contrary to Guerra's testimony that it had been ghostwritten by lawyers for the plaintiffs.

Chevron used hundreds of lawyers to target Donziger, a solo practitioner and human rights attorney. The company admitted its long-term strategy was to "demonize" him. But Chevron's lawyers, in an act of utter cowardice, dropped all damages claims against Donziger on the eve of the RICO trial to avoid a jury of impartial fact finders. This resulted in a ridiculous "judgment" from an arrogant, pro-business federal judge that Barrett constantly lauds in his reporting.

If you want to understand the utter depravity of Chevron's RICO case and why it has completely collapsed since trial, see this press release and this 33-page response to the erroneous findings of the trial judge. But you will hear none of these facts in Barrett's reporting. In his article on the Resolute lawsuit, he writes about the Chevron case as follows:

Chevron proved that its activist foes had transformed their suit against the company into an extortion plot featuring bribery, fabrication of evidence, and the ghostwriting of judicial opinions.

Really? As the above reports prove, this type of analysis is just flat-out wrong and deceptive. The totality of the evidence proves there was no bribe or ghostwriting and the only party to fabricate evidence in the RICO case was Chevron. Yet Barrett has completely ignored these critical developments. He does not even give a nod to the idea of a competing narrative. The perspective of Donziger and his clients is just flat-out missing from much of his reporting for Bloomberg.

While Barrett used his Bloomberg platform to repeatedly shill for Chevron during the RICO trial in 2013, he has never reported on the collapse of Chevron's RICO evidence and still acts as if the flawed judgment in that case is End of Story. Yet that RICO judgment is now virtually worthless to Chevron in courts around the world that are threatening to seize company assets. And, Chevron's RICO strategy has not stopped the Ecuadorian villagers from pursuing their claims in what surely has become one of the most successful corporate-accountability campaigns of all time.

Chevron now faces a veritable mountain of liability ($12 billion) in Canada in a judgment enforcement action that already won the unanimous backing of the country's Supreme Court -- another key development never reported on by Barrett. That's on top of the dozens of factual errors, use of outright plagiarism, and the fictionalized scenes in Barrett's supposedly non-fiction book on the Ecuador case that was rushed out in 2014 to celebrate Chevron's supposed "victory" over Donziger that never was.

The credibility of that book -- most of which could have been written by Chevron's public relations team -- was utterly destroyed in a point-by-point takedown by Donziger himself. Donziger, by the way, is still happily working to hold this monster corporation accountable for its environmental misconduct in jurisdictions around the world.

Barrett's errors in his Ecuador reporting curiously always point in one direction -- Chevron's. He has denied the truth about what really happened to the indigenous people of Ecuador, whitewashed the company's environmental crimes and fraud, and celebrated the "genius" of corporations that use the profits they suck out of the earth to manipulate the civil justice system and violate the constitutional rights of their adversaries.

The fact Barrett is part of a troika of business reporters who for years have shamelessly carried Chevron's water for its disastrous behavior in Ecuador is a real stain on Bloomberg's reputation.

To maintain her own credibility, Bloomberg editor Megan Murphy should get rid of this dinosaur once and for all. Bloomberg should assign a reporter to the Chevron legal beat who can write about these critically important matters with a more balanced perspective.

Thursday, June 22, 2017

Note to George Mason University law students: exercise extreme caution when dealing with Professor Michael I. Krauss, a self-proclaimed "expert" in ethics who in his spare time shills for Chevron's criminal cover-up of its toxic dumping in Ecuador's Amazon rainforest. You might want to ask Krauss in his next ethics class if his obvious ties to Chevron and his obfuscation of the truth compromise the academic standards of George Mason.

As background, Krauss teaches at a university that has received major funding from the Koch Brothers and their largely anonymous network of right-wing donors exposed brilliantly in Jane Mayer's book Dark Money. The Kochs have donated tens of millions of dollars to turn George Mason into a "libertarian mecca" that serves as a beachhead near the nation's capital for political and academic attacks on almost any form of government regulation. (See pages 149-151 of Mayer's book for background.)

We have no problem if Krauss is an avowed libertarian, even if his university has sold its soul to right-wing donors. We do have a problem with his estranged relationship with the truth.

In fact, in his many blog posts on Forbes on the Chevron case, Krauss repeatedly ignores, obfuscates, and distorts the most basic facts to apologize for the company's atrocious behavior in Ecuador as found by multiple courts around the world. Unlike the propagandistic blog posts of Krauss, these court findings are based on voluminous scientific evidence and peer-reviewed and scholarly research.

Consider what Krauss ignores in his posts about Chevron's role in creating a catastrophe so massive it is called the "Amazon Chernobyl" by locals:

**Chevron was found by three layers of courts in Ecuador -- the country where company lawyers had insisted the trial be held -- to have deliberately and systematically dumped billions of gallons of toxic oil waste into the waterways of the Amazon rainforest over a two-decade period, decimating indigenous groups and causing an untold number of cancer deaths. The court decisions were based on more than 105 technical evidentiary reports and Chevron's own admissions. Ecuador's highest court unanimously affirmed Chevron's liability.

Here is what Krauss ignores and doesn't want you to see: a summary of the overwhelming evidence against Chevron; a legal brief that explains the horrific history of the company's toxic dumping, subterfuge, fraud, and criminal cover-up in Ecuador and the United States; and a summary of the peer-reviewed health studies that show high cancer rates and other impacts.

**Initially sued by indigenous villagers in New York federal court in 1993, Chevron praised Ecuador's justice system and accepted jurisdiction in the country thinking it could engineer a political dismissal of the case. After that failed, and with the scientific evidence against it mounting, Chevron sold its assets in Ecuador to evade paying any eventual judgment. Making a total mockery of the rule of law, Chevron then went into lockdown mode and tried to sabotage and paralyze the very trial it insisted on having. It once filed 39 repetitive motions in less than one hour just to tie up the court.

**Ultimately, Chevron was found liable in its preferred forum of Ecuador and ordered to pay $9.5 billion in damages and costs -- a pittance compared to the roughly $50 billion BP has paid out for the much smaller Gulf of Mexico spill in 2010. Yet rather than pay the judgment and clean up the toxic disaster it caused, Chevron threatened the indigenous groups who brought the claims with a "lifetime of litigation" if they persisted.

**Making good on its threat, Chevron retaliated by suing the plaintiffs and their lawyers under the civil RICO law back in the same U.S. court where it refused to defend the underlying claims. The company again made an utter mockery of justice, dropping all damages claims on the eve of trial to avoid a jury of impartial fact finders. Chevron then bribed a witness with a $2 million payment to claim that the judgment in Ecuador was "ghostwritten" by the plaintiffs -- an absolute lie that has since been proven wrong by a forensic examination.

**The bribed Chevron witness, Alberto Guerra, later admitted that he repeatedly lied under oath on behalf of the company in the U.S. federal court proceeding. Separately, a forensic examination by the American expert J. Christopher Racich demonstrated that the Ecuador trial judge wrote the decision against Chevron on his office computer, contradicting Guerra's false claim that it had been given to the trial judge on a flash drive just before it was issued.

**In the meantime, the Supreme Courts of two countries -- Ecuador and Canada -- have unanimously rejected Chevron's fabricated "fraud" claims and ruled in favor of the villagers. The affected communities and their legal team are currently trying to seize company assets in Canada and Brazil to force compliance with the Ecuador judgment. The next hearing in Canada is this October in Toronto.

**In total, 18 judges appellate judges in Ecuador and Canada have ruled in favor of the villagers. Yet Krauss writes only about a rogue decision from one U.S. federal judge who relied on false evidence fabricated from Chevron for his findings. The Second Circuit Court of Appeals refused to review those false findings, as did the U.S. Supreme Court.

Because of its corrupt acts in Ecuador and the United States and its utter disdain for the rule of law, Chevron now finds itself in serious trouble. It faces possible criminal and civil jeopardy for its cover-up in addition to its $12 billion environmental liability (rising $300 million per year because of interest) to the people of Ecuador. Company management, led by CEO John Watson, also faces a shareholder revolt over its unethical behavior in trying to evade paying the Ecuador judgment.

In his latest blog, Krauss tried to claim that a recent decision by the U.S. Supreme Court to deny review of the deeply flawed RICO decision somehow vindicates the rule of law. Not true. The Supreme Court actually is turning a blind eye to the rule of law. Consider this shameful fact: no U.S. appellate court ever considered evidence of Chevron's contamination, the company's bribes of its star witness, the admissions by the Chevron witness that he lied under oath, or the results of a forensic examination that completely exposes the RICO decision for the fraud that it is.

Krauss also suggests that Steven Donziger, one of the American lawyers for the villagers who has courageously led the fight against Chevron, should be disbarred based on the company's fabricated evidence. Chevron has admitted its strategy in the case is "to demonize" Donziger rather than defend on the merits. Playing Chevron's game on this point is not only unethical, but could lead to serious problems for Krauss. Calling publicly for a fellow lawyer to be disbarred based on false evidence is itself a major violation of the rules of ethics.

This sad episode with Krauss reminds us of another law professor from Notre Dame who also allowed himself to be used as a Chevron stooge in the Ecuador matter, with disastrous results. That professor, Douglas Cassell, was slapped down by Notre Dame's administration for hiding the fact he was receiving payments from Chevron while shilling publicly for the oil giant. He was also forced to remove all of his Chevron materials from his page on the school's website. For background, see here.

Krauss should be forced to disclose to his students, the George Mason administration, and Forbes why he he has posted so many misleading blogs that try to apologize for Chevron's environmental crimes and fraudulent cover up. Is is possible that he too is being paid by Chevron or any of the many groups funded by the oil company? Has Chevron donated money to George Mason? If so, why has Krauss not disclosed these obvious conflicts of interest?

We might add that Krauss brags on his resume for having arranged the largest ever "anonymous" donation to George Mason. He might start the process of complying with his ethical obligations by disclosing whether Mr. Anonymous made his money in the fossil fuel industry, whether he is Charles or David Koch, or whether he might have something to do with Chevron. And Krauss might be forced by the George Mason law faculty to cease teaching "ethics" until he comes clean on his own ethical issues.

The personal reputation of Krauss, and by extension that of the entire law faculty at George Mason, is in play. The university has a robust ethics policy. It should be enforced. In the meantime, it is pretty safe to conclude that the blog posts of Krauss on the Chevron case are that of a political hack, not that of a law scholar.

Perhaps wisely, the Ecuadorian contamination victims have not thus far piled litigation upon litigation by pressing for yet another legal case out of these illegal payments, especially given that a federal law claim would be heard by a U.S. federal court system that has thus far utterly rolled over to Chevron—memorably described by the judge in the RICO case as "a company of considerable importance to our economy." (He went on to opine from the bench that "I don't think there is anybody in this courtroom who wants to pull his car into a gas station to fill up and finds that there isn't any gas there because these folks," i.e. the Chevron's Ecuadorian victims.)

But that doesn't mean the Ecuadorians (or federal prosecutors) wouldn't have a case if they saw fit to bring one before the statute of limitations expires sometime in the next year. Paul set out the relevant statute, 18 U.S.C. § 201et seq., in his blog. It sets out the crime and associated fines and imprisonment (up to two years) for anyone who "directly or indirectly, gives, offers, or promises anything of value to any person, for or because of the testimony under oath or affirmation given or to be given by such person as a witness upon a trial." § 201(c)(2).

Critically, the only criminal intent required here is the intent to make the payment. If there provable "intent to influence the testimony," the penalty goes up to a maximum of 15 years imprisonment.

Did Chevron and its legal team at Gibson Dunn give "anything of value" to Alberto Guerra "for or because of [his] testimony" in Chevron's RICO case? Did they do so "to influence [Guerra's] testimony"?

Oh yeah. Oh $$$ Yeah.

The point of this blog is not to review all the ugly Guerra details. You've got Paul's blog, the Earthrights blog, and the recent amicus brief. You've got this analysis from when the payments were first uncovered, and this trial motion (to the biased judge above) to strike Guerra's testimony. You've got these reportsandblogs about later Guerra recanting his obviously false testimony, and about that testimony later being proven false through a forensic analysis of the hard drive of an Ecuadorian judge. (This analysis showed that Guerra's elaborate story of helping to "ghostwrite" the environmental judgment against Chevron on one of the plaintiffs' laptops was flat-out false. The judgment was properly written by the Ecuadorian judge on his computer in chambers.)

Though we'll get to Chevron's "defense" in a second, this really isn't a subtle or nuanced case. As the snippet in Paul's blog sets out, this is Chevron handing Guerra a suitcase full of $18,000 in cash at their first meeting, and Guerra responding with "Couldn't you add a few zeroes?"

Many zeroes are indeed later added, in the form of more hundreds of thousands of dollars in additional cash payments and a regular "salary," a housing stipend, a car, health insurance, and permanent immigration to the United States—a benefit of priceless value to Guerra because it allowed him to reunite with several of his adult children living illegally in the United States who he hadn't seen in years.

In return, Guerra put himself and his testimony at Chevron's disposal. He was prepped for over 50 days by Chevron lawyers in advance of his RICO testimony, and has been trotted out to testify (falsely) in other subsequent proceedings. His "fact" testimony changed constantly (and dramatically) to fit shifting factual developments in the case and Chevron's needs at any given point. The whole thing was truly a disgrace.

Chevron's defense (and the company has spent well over $1 billion on legal fees in the case, so yes, it purports to have a defense) is that Guerra was paid not for his testimony, but rather for the underlying information he gave Chevron—and subsequently testified about.

You might be thinking: Say what? How is this not paying for testimony? You wouldn't be alone. When famed legal ethics and constitutional law scholar Dean Erwin Chemerinsky heard that Chevron and Gibson Dunn were making this claim, he was so outraged he offered the Ecuadorian a free legal opinion to try to convince the court not to accept the testimony:

[I]f a party or its counsel were permitted to pay a testifying witness for physical evidence, beyond the reasonable value of that evidence, and to pay the witness a salary in exchange for an agreement to testify, there would be little left to the rule against compensating fact witnesses. Lawyers could always circumvent the prohibition of paying non-expert witnesses for their testimony by saying it was to pay for documents or other physical evidence.

Specifically on the evidence versus information question, Chemerinsky did not entirely reject the notion that a party might be able to pay for "information," but emphasized the key restraint on any such practice—that the payments not enrich the witness.

If a lawyer pays a testifying witness for physical evidence, such payments must be based on the reasonable value of the evidence, and a reasonable fee for the witness's time spent gathering the evidence. For example, if a lawyer were to pay to obtain a computer from a witness, the lawyer should not pay the witness more than the replacement cost of the computer, and any costs incidental to copying the necessary data. In my opinion, the reasonable value of the physical evidence should not be based on its value to the lawyer or the party obtaining the evidence. If that were the rule, there would be virtually no limitation on payments that lawyers could make to fact witnesses under the guise of obtaining evidence.

Now, Chevron got an ethics opinion, too. It got it from Professor George M. Cohen at the University of Virginia Law School, and while it most certainly was not provided pro bono, Chevron apparently did the right thing by consulting with Cohen and explaining the situation before they made any payments to Guerra. The distinguished professor signed-off on some payments to Guerra in some circumstances, setting out clear ethical lines to be followed as Chevron entered such ethically tricky waters. So far, so good. (I have a dim view of the substance of the opinion, which I may explain in a later blog, but at least the approach thus far was minimally adequate.)

But then, Chevron and Gibson Dunn decided they didn't like all those ethical lines after all. For example, throughout his 20-page, gold-plated opinion, Professor Cohen repeatedly emphasized the importance of the fact that the substantial payments for information were okay because it was just a cash-for-information deal, unconnected from the focus of § 201, namely testimony . He wrote:

On its face, §201(c)(2) does not seem to apply to payments purely for information or documents, as opposed to testimony. Because Chevron intends to pay for pre-existing information, and currently has no intention to call the witness to provide testimony in the pending federal proceeding in New York, or any other federal proceeding, the payment does not seem to violate the statute.

But Chevron and Gibson Dunn decide they do want Guerra to testify after all. (Or maybe that was the plan from the beginning.) In any event, that's a problem given the do-not-cross lines set out in the opinion, right?

No sir, no problem at all! They go back to the good professor, who provides a revised version of the same opinion, neatly excising out the inconvenient (italicized above) parts:

On its face, § 201(c)(2) does not seem to apply to payments purely for information or documents, as opposed to testimony. Because Chevron intends to pay for pre-existing information, the payment does not seem to violate the statute.

Gee thanks Professor! What a pro. No wonder these guys are paid the big bucks.

With the "information versus testimony" distinction in mind, Chevron and Gibson Dunn and their agents met with Guerra. Their attempt to "stay within the ethical lines" is, frankly, comical. The meeting was recorded:

CHEVRON: The money we're talking about is for, the money has to be for information—

GUERRA: Yes, yes, yes.

CHEVRON: It cannot be for testimony. It has to be for, it has to be for—

GUERRA: Yes, yes, yes, but not for only—

CHEVRON: —or for creating any of that [VOICES OVERLAP]—

GUERRA: For example, for example, right now, of all that—right? I don't earn anything and neither do you.

CHEVRON: Uh-huh.

GUERRA: We can talk about gold, old man.

CHEVRON: Of course.

GUERRA: But, damn, in practice, nothing.

CHEVRON: Of course, but I mean, it has to be information, not— [OVERLAP]

GUERRA: Sure, this is a matter of "here you are, these are my documents ...

CHEVRON: There, that's it.

GUERRA: —and that has value. It's worth one, or worth a million. But that does have value.

CHEVRON: Exactly.

GUERRA: That's the whole issue. Sure, it's clear to me.

It's clear to us too, Alberto. All too clear.

You can almost see the grins on their faces as they go through this charade, knowing the recorder is running. At the end of this conversation, they "purchase" from Guerra the "information and evidence" listed on this Appendix: a used hard drive and a handful of flash drives, a few old calendars ("day planners"), and "permission to access, inspect, copy, and preserve" two email accounts. The reasonable value of all this, to Guerra? What do you think? Fifty bucks? One hundred?

Guerra gets a suitcase with $18,000.

Of course, that's not the "million" Guerra wanted. As was made "clear" to him, he would get it—he would have to wait a little bit.

At this point (or after another "purchase" of old technology and records for an additional $20,000), Chevron and Gibson Dunn start shifting the payments into a new "ethical" theory: witness expenses. For this theory, Guerra will indeed be a witness, utterly reversing the central fact that justified the first two Cohen opinions.

They need another ethics opinion. How to get it? Perhaps they approached a second ethics professor without telling him or her about Cohen? No, don't be silly. Remember, Cohen is a pro. He can handle anything.

So back to Cohen they go, now with the fact that they want Guerra to sign a contract sign a contract obliging himself to testify at Chevron's direction. Witness expenses are typically understood to include travel, accommodation, copying costs, and at most an hourly fee for discrete work. Here, among many other perks as noted above, Chevron put Guerra on an indefinite "salary" of $10,000 per month—20 times what he was earning before he started negotiating with Chevron. Nonetheless, Professor Cohen opines, this is a reasonable understanding of "expenses." (Professor Chemerinsky, meanwhile, makes clear that any payment of a "salary" to a fact witness is "a clear violation" of the rules.)

The problems with the Cohen opinions go on and on. I won't (continue to) digress. Sadly, for Chevron and Gibson Dunn, the opinions have basically the same value as they did on their sell-by date—not based on their ridiculous arguments and client-serving logic, but based their cover-your-ass (CYA) value. No matter how bad they are, Chevron and Gibson Dunn get to say, gee, he's the expert, how could we have known better?

Personally, I don't think it's enough in these circumstances. The fact that Cohen was so acrobatic in adjusting his opinions to suit Chevron's needs as they emerged I think lessens their CYA value considerably. Depending on the context in which a § 201 claim or criminal prosecution might arise, the central issue would still go to a jury: were Chevron's cash payments, $120,000/year "salary," immigration, and other perks, made to Alberto Guerra "for or because of [his] testimony" in the RICO case? (For the more severe sanction in § 201(b)(3), were the payments "corrupt," i.e. to "influence [that] testimony"?)

Not a toughie.

Not surprisingly, Chevron seems more than a bit nervous about l'Affaire Guerra. At Chevron's recent annual shareholders summit, Chevron played a video it had commissioned crafting itself as the hero of the whole Ecuador situation, an unfairly targeted corporation that had the guts to stand up to a criminal band of deceitful Ecuadorians and conniving U.S. lawyers. It then took questions. But when a question was asked about Guerra, Chevron CEO John Watson brusquely turned the entire meeting to another topic and the questioner's microphone was shut off.

But there are a lot of microphones that Chevron can't shut off. Shareholders ended up voting at historic levels to rebuke CEO Watson for his "mishandling" of the Ecuador case; a full 39% (a huge percentage for a shareholder resolution) voted to install an independent chair that analysts claimed would bring more perspective to the company's Ecuador strategy. (The company's self-stated strategy at present is "fight until hell freezes over, and then fight it out on the ice.")

In a year, Chevron and Gibson Dunn might breathe easier, as they will be able to try to fight off any criminal prosecution on the Guerra payments by pointing to the federal five-year the statute of limitations. Until then, Chevron's fight on the ice is more like a cold sweat. We'll see what happens next.

One thing clear from the wreckage that was Chevron's annual meeting this week: CEO John Watson is blatantly lying to his own shareholders over the disastrous handling of the company's $12 billion Ecuador environmental liability.

Putting out fake news is not working for Donald Trump and it will not work for John Watson either. But that is exactly what he is trying to do to obfuscate the company's responsibility for dumping billions of gallons of toxic oil waste into the waterways of indigenous groups in Ecuador's Amazon.

Chevron's liability stems from the findings by three layers of courts in Ecuador that the company deliberately discharged the oil waste over two decades and abandoned roughly 1,000 unlined oil waste pits gouged out of the jungle floor. The contamination decimated indigenous groups, causing an outbreak of cancer that has killed or threatens to kill thousands of innocent civilians. Chevron operated in Ecuador under the Texaco brand from 1964 to 1992.(See here for a summary of the overwhelming evidence against Chevron. See here for a photo essay by journalist Lou Dematteis on the humanitarian catastrophe caused by Chevron's oil pollution in Ecuador.)

Worse, Watson and members of his legal team -- led by Chief Counsel R. Hewitt Pate and outside counsel Randy Mastro -- might face criminal prosecution for bribing a critical witness to try to evade paying the judgment. That's on top of Watson recently being caught red-handed trying to rip off Australia with a tax scheme related to the company's Gorgon natural gas project, costing Chevron shareholders about $300 million in addition to major reputational damage.

As we sit here today, after two decades of the historic battle in Ecuador between Big Oil and indigenous groups, Watson's biggest problem is that a legal case that the company probably could have settled for approximately $100 million in the mid-1990s is now worth $12 billion. That's on top of the estimated $2 billion Chevron has spent on 60 law firms and 2,000 lawyers to defend the case. And it doesn't include the $300 million in annual interest that accrues to the judgment.

The $12 billion figure is based on a final and enforceable judgment that was affirmed unanimously by Ecuador's Supreme Court in the venue where Chevron accepted jurisdiction. The company had filed 14 sworn affidavits praising Ecuador's judicial system when it insisted the trial be held in the country. Now, Watson refuses to pay the judgment despite overwhelming evidence of Chevron's toxic dumping, fraud, and other wrongdoing .

One might think that by now Chevron's massive expenditures should have achieved its obvious objective -- the killing off of the environmental claims of the villagers. Instead, the expenditures seem to be backfiring. The villagers simply won't go away. Despite some occasional setbacks through the years, the undeniable truth is that they are now gaining strength both in court and with the company's own shareholders.

In court, Chevron faces a critical hearing this October in Toronto as the villagers try to seize company assets in Canada to recover the full amount of their judgment. Already, two appellate courts in Canada (including the nation's Supreme Court) have ruled unanimously against Chevron as Watson continues to fail in his attempts to try to shut down the the asset seizure action.

Watson's effort to block a similar enforcement action targeting company assets in Brazil also has failed.

Among Chevron shareholders, several large institutional investors put the hurt on Watson at the company's annual meeting. They lined up behind a resolution that accused Watson of "materially mishandling" the Ecuador litigation. This is a startling public rebuke of a CEO that one rarely sees in annual meetings of large companies.

One shareholder resolution that sought Watson's removal as Chairman over the Ecuador disaster received a whopping 39% of all outstanding shares -- a huge level of support. Normally, a shareholder resolution that receives 10% support is considered fantastically successful. Two other resolutions challenging Watson over his mishandling of the Ecuador litigation also received significant support. One received 31%, the other 20%.

In the court of public opinion, Watson's position also seems to be deteriorating as he fails to address shareholder concerns over Ecuador.

After the slap down of Watson's leadership at the annual meeting, Watson made the extraordinary claim that the company's Ecuador policy actually "enjoys overwhelming support from shareholders." Watson later turned off the microphone when a shareholder challenged him over the Ecuador policy. He is burying his head in the sand.

In his terse statements about Ecuador at the meeting, where he looked visibly uncomfortable, Watson refused to acknowledge that 43 civil society groups sent him a letter criticizing the company's attempt to use "racketeering" laws in the U.S. to retaliate against the villagers and their lawyers. He also ignored the 17 environmental and human rights groups and 19 international law scholars who have backed the villagers in legal briefs.

Watson's so-called "disclosure" of the Ecuador liability at the annual meeting and in the company's public filings are part of an elaborately constructed lie.

Watson tries to claim a 2013 decision by a U.S. federal judge in a farcical non-jury trial that has no legal relevance somehow nullifies the entire Ecuador judgment. But even in that one-sided proceeding, called a Dickensian farce by a prominent trial lawyer, the judge said he was not exonerating Chevron from its responsibility for the environmental damage in Ecuador.

Further, the entire factual basis for that U.S. case has collapsed in spectacular fashion -- a reality that Watson also refused to acknowledge to shareholders or in the company's SEC filings. It turns out that Chevron bribed its admittedly corrupt star witness, Alberto Guerra, with $2 million in cash and benefits. That witness later admitted repeatedly lying in U.S. court about several key issues.

Amazon Watch, the environmental group that has battled Chevron for years, posted a blog detailing how the company's illegal witness payments likely violate federal criminal law and could subject those involved to criminal prosecution. Another prominent U.S. environmental group, Earth Rights International, also posted a blog explaining how Chevron fabricated evidence.

We will give the final word to Carlos Guaman, the President of the Ecuador-based Amazon Defense Coalition, known more widely by its Spanish acronym FDA. The FDA is the group that has received international renown for courageously bringing the environmental lawsuit against Chevron on behalf of the affected indigenous and farmer communities.

Guaman warned Watson that the villagers are considering a new plan to file additional judgment enforcement actions in other countries to seize Chevron assets to force the company to abide by the rule of law. "Our people are dying because of Chevron's pollution, so we have no choice but to bring as much pressure to bear on the decision makers," he said.

That's putting it nicely. To Guaman and his followers, we say please continue to kick Watson's posterior until he and his cohorts are held fully accountable.

It is only a matter of time before Watson is either forced out of his job ,or forced to pay the full cost of the grotesque environmental catastrophe his company has visited on the people of Ecuador.

Tuesday, May 30, 2017

Whoever directly or indirectly, corruptly gives, offers, or promises anything of value to any person, or offers or promises such person to give anything of value to any other person or entity, with intent to influence the testimony under oath or affirmation of such first-mentioned person as a witness upon a trial, hearing, or other proceeding... or with intent to influence such person to absent himself therefrom; shall be fined under this title or imprisoned for not more than two years, or both.18 U.S. Code § 201 – Bribery of public officials and witnesses

It may seem like this is stating the obvious, but it's a crime to bribe a witness to a U.S. federal court. Funny thing, though; Chevron has done just that, to the tune of $2 million dollars. Yet no one inside Chevron has demanded an explanation for this – until now. In advance of the company's annual shareholder meeting tomorrow, shareholders and members of the public are demanding that Chevron's Board of Directors determine just who authorized the payments of bribes to disgraced former Ecuadorian judge Alberto Guerra in exchange for his testimony in Chevron's retaliatory lawsuit against the affected Ecuadorians communities and their lawyers.

To recap, Chevron was found liable in 2011, after decades of legal battles, for $9.5 billion for having deliberately polluted the Ecuadorian Amazon by dumping over 16 billion gallons of toxic waste and causing a massive health epidemic which has costs well over a thousand lives to date. Rather than accept responsibility and pay for a cleanup, Chevron countersued the Ecuadorians and their lawyers and fabricated an elaborate lie alleging it was the victim of an injustice and that the Ecuadorian verdict against it was ghost-written by a judge that the Ecuadorian communities had bribed. Chevron won that separate case in a shockingly-biased trial and did so based primarily on the sworn testimony of known-liar Alberto Guerra. (For any readers wanting an extended review of the facts, please read this excellent post from our friends at EarthRights International.)

As we have written about before, Guerra was already seen as an unreliable witness at the time of the countersuit and even the presiding judge, Lewis Kaplan, acknowledged that he was a liar and corrupt. He noted that Guerra "often has been dishonest," and that he had "multiple" times in his professional history "accepted bribes," "lied," and "broken the law." And Kaplan also noted that "Guerra's willingness to accept and solicit bribes" among "other considerations, put his credibility in serious doubt, particular in light of the benefits he has obtained from Chevron." Yet, Kaplan allowed his testimony to be admitted. Guerra's testimony was central to Chevron's allegations and the trial court's findings. It was the only evidence of a scheme to bribe the presiding Ecuadorian Judge to rule against Chevron.

In July 2012, Chevron sent Andres Rivero, one of its U.S. lawyers, and a private investigator to Ecuador – with $18,000 in a suitcase – to meet with Guerra. The cash was supposedly to buy Guerra's computer; Chevron hoped to find a draft of the final judgment, which Guerra claimed he had written. Recordings of the meeting show Rivero, the investigator, and Guerra negotiating a payment:

In January 2013, Chevron and Guerra signed a contract detailing the benefits Chevron would provide to Guerra and his family in exchange for Guerra testifying. The benefits were guaranteed for two years, with an option of renewal... The benefits Chevron agreed to pay Guerra were "compensation" and were separate from and "in addition" to "travel and other expenses" associated with testifying.

All told, since July 2012, Chevron had given Guerra at a minimum:

$432,000 in monthly payments;

$12,000 for household items;

$48,000 in cash in exchange for evidence;

A new computer;

Payment of all U.S. taxes;

Expenses for Guerra and his family to move to the U.S.;

Health insurance for Guerra and his family;

A car and car insurance; and

Payment for an immigration attorney for Guerra and his family, an attorney to represent Guerra in the US proceedings, an Ecuadorian attorney, a tax attorney, and an accountant.

Money well spent for Chevron. Or was it?

You might think Chevron's ongoing payments to Guerra would ensure he kept up his lies for Chevron, but Guerra's corruption was too much to keep hidden. When he took the stand in a related arbitration proceeding in 2015, he admitted that he lied under oath in Kaplan's court! In fact, he confessed that he misled the court about the bribe and about having arranged to ghostwrite the judgment. He also admitted he did so specifically to get a larger payout from Chevron. This put Chevron in serious trouble as it became even more clear that the company paid him specifically to lie for it.

When pressed about the fact that Chevron bribed Guerra and didn't even get what it paid for, CEO John Watson might try to defend his actions by claiming that Chevron didn't know Guerra was going to lie. Yet, Chevron's lawyers coached him in preparation for the trial for 53 days! Of course, Chevron and its lawyers at the corporate hatchet firm Gibson, Dunn & Crutcher knew Guerra was going to lie. They had been negotiating a price for this lies for years as the ChevronPit blog has pointed out:

Chevron lawyers led by Randy Mastro then coached Guerra for 53 consecutive days before he took the stand in Kaplan's courtroom. "Money talks, but gold screams," Guerra told Chevron's lawyers when he negotiated his "fee" for testifying.

Now Chevron faces an enforcement action in Canada, where the Ecuadorians continue to pursue the company's assets to finally pay for a cleanup. There will be another hearing in that case this October and Chevron will have the opportunity to explain Guerra's contradictory testimony in another court. I have a feeling it will do almost anything to avoid that embarrassment, however. In the meantime, CEO Watson and senior legal counsel Hewitt Pate will have to explain to shareholders how bribing a federal witness to commit fraud in U.S. federal court is an appropriate use of millions of dollars of shareholder funds. For a company already known worldwide as a gross polluter and environmental criminal, Watson has achieved the seemingly impossible by making Chevron's reputation even worse.

Tuesday, May 23, 2017

Chevron is again trying to spread fake news to try to distract attention from its environmental crimes and sham remediation in Ecuador, where the company is on the hook for a $9.5 billion liability and faces potential criminal prosecution for presenting fabricated evidence to a U.S. court.

Last week, we reported how dismissed Fortune reporter Roger Parloff resurfaced at Yahoo Finance with a completely unbalanced article on the case to help absolve Chevron of responsibility for the billions of gallons of toxic oil waste it admitted to dumping into the waterways and lands of indigenous people in Ecuador. (Here is a summary of the overwhelming evidence against Chevron as found by three layers of courts in Ecuador, where the company insisted the trial be held.)

Now we see the right-wing blog Hot Air is also blowing major hot air of its own in service of the Chevron propaganda machine.

Hot Air, which is connected to the Koch Brothers funding network outlined brilliantly by Jane Mayer in her book Dark Money, claimed in a recent blog that Chevron is the subject of a "shakedown" by the villagers and their lawyers. The blog then quotes none other than Parloff's unbalanced article published by Yahoo Finance in support.

Both Parloff and Hot Air used the occasion to promote Chevron's opposition brief to the U.S. Supreme Court in an appeal of a bogus "racketeering" decision that the company obtained from controversial New York trial judge Lewis A. Kaplan. That judgment resulted from a one-sided proceeding termed a "Dickensian farce" by one of the nation's leading lawyers.

(For a comprehensive history of Chevron's subterfuge in the case, see this appellate brief submitted by Steven Donziger, the longtime lawyer for the Ecuadorians and a primary target of the company's attacks. Here is a blog from a lawyer at Earth Rights International explaining Chevron's fabricated evidence and illegal witness payments. Here is an explosive new report and press release that outlines Chevron's attempts to manipulate U.S. courts with false evidence.)

Both Parloff and the blog also ignore critical new evidence that shows Chevron "won" its decision from Kaplan after it illegally bribed a witness with at least $2 million in cash and benefits. The admittedly corrupt Chevron witness, Alberto Guerra, later admitted under oath that he lied about several critical issues in Kaplan's court while a forensic examination proved the falsity of Chevron's fake news that the judgment against it in Ecuador was "ghostwritten".

The world knows that Chevron produces and refines lots of oil. But few know the extent of its investments to manipulate public opinion to hide its wrongdoing in Ecuador and elsewhere. Parloff and Hot Air are vehicles for this strategy.

Thorne also ran a website designed to attack Karen Hinton, the highly effective U.S. spokesperson for the Ecuadorian villagers. It turned out that while Thorne was targeting the Ecuadorians as a "journalist" he actually was married to a Chevron employee and being paid by the company.

For years Chevron has used the notorious public relations operative Sam Singer, who hails from the Roger Stone school of political mischief, to funnel money to bloggers to parrot its fake talking points. See here for background on the Chevron dirty tricks operation.

Friday, May 19, 2017

Journalist Roger Parloff, who recently left Fortune magazine, has resurfaced as a writer for Yahoo Finance. But one thing that hasn't changed is his dishonest and unbalanced reporting in favor of Chevron in the historic Ecuador pollution case where the company faces a huge liability for its toxic dumping in the rainforest.

Parloff recently published a story on the case Yahoo Finance that completely ignored critical new evidence that devastates Chevron's defenses, including that its star witness admitted that he repeatedly lied on the stand after being paid $2 million by the company. The villagers who won the $9.5 billion judgment are currently enforcing it against Chevron's assets in Canada and Brazil. But Parloff also refused to explain the huge significance of legal developments in those two countries -- developments whose importance dwarfs developments in the U.S. phase of the proceedings.

As background, courts in Ecuador where Chevron insisted the trial be held found the company guilty of dumping billions of gallons of toxic waste in Ecuador's Amazon region, decimating indigenous groups and causing an outbreak cancer confirmed by several independent studies. Company officials led by CEO John Watson refused to pay the judgment and threatened the villagers with a "lifetime of litigation" if they persisted in pursuing their claims.

Parloff's article focused largely on a narrow appeal to the U.S. Supreme Court by the villagers and their lawyer, Steven Donziger, over a retaliatory "racketeering" judgment obtained by Chevron in the United States from Judge Lewis A. Kaplan. That ruling, issued after the judge refused to seat a jury, was based on evidence fabricated by Chevron and presented via a company witness who claimed with no corroborating evidence that the Ecuador judgment was "ghostwritten" by the plaintiffs.

The sad spectacle of the Kaplan judgment -- where a U.S. trial judge tried to reverse a decision by a foreign country's judiciary -- is so bizarre and unprecedented that it has little relevance regardless of what the U.S. Supreme Court decides to do. Neither Kaplan nor the justices have the power to block enforcement actions in Canada and Brazil where all of Chevron's evidentiary problems with its lying witness will be on full display.

Already, in a very bad sign for Chevron, Canada's Supreme Court rejected the company's attempt to use Kaplan's false "findings" to block an asset seizure action filed by the Ecuadorians targeting some of the company's oil fields, refineries, and other assets in that country.

Kaplan's judgment also was based on a "Dickensian farce" of a proceeding in the words of prominent attorney John Keker, who withdrew his representation of Donziger in protest. Kaplan allowed Chevron's "evidence" to be fully presented while he barred all evidence of Chevron's toxic dumping and fraud in Ecuador that was used to find the company liable. He also excluded Donziger's counterclaims that outline Chevron's environmental crimes, sham remediation, and attempts to harass and silence company critics.

The latest U.S. Supreme Court appeal that attracted Parloff's attention will present an important test for the justices. The court should of course toss the Kaplan decision because of the false evidence and a myriad of other legal problems, including the chilling implications of letting wealthy corporations use the RICO statute to try to silence human rights victims and their lawyers. (For summaries and links to the various briefs, see here, here, and here.)

Parloff instead used the platform of Yahoo Finance to reinforce Chevron's tired arguments designed to "demonize" Donziger who for years has led the battle against the company's fraud and corruption. (See this article in Rolling Stone.) Parloff also failed to mention that Chevron paid $2 million to the discredited witness who falsely claimed the judgment was written by the plaintiffs.

That Chevron witness, Alberto Guerra, admitted under oath in a separate proceeding that he lied about several critical issues before Kaplan. Separately, a new forensic analysis by one of the world's leading computer experts proved Guerra's "ghostwriting" story was false. Yet Chevron, Kaplan, and a federal appellate court continue to credit the Guerra testimony, casting a mighty large stain on the reputation of our federal judiciary.

This information about Chevron's use of Guerra as its paid stooge has been readily available in public legal filings for years. It recently was documented meticulously in an explosive new 33-page report called How U.S. Courts Got It Wrong In Chevron's Amazon Pollution Case. The report, released last week and written by lawyers for the Ecuadorians,demonstrates how Chevron's false evidence and fraud have infected the U.S. legal proceedings.

Again, Parloff ignored all of it.

When at Fortune, Parloff consistently wrote articles parroting the points in Chevron's legal arguments while squelching letters of dissent pointing out deficiencies in his reporting. Already, there are signs he has tried to delete comments critical of his article on Yahoo Finance.

One of those comments was posted by Aaron Page, a lawyer for the villagers. Page offered this about Parloff's apparent attempt to launder Chevron talking points through a legitimate news outlet:

This reporter [Parloff] is the master of hyperventilation. He was a critical asset of Chevron as it fanned the flames of outrage and indignation in the early days of the RICO case. Most of the allegations from those days were quietly dropped from the case (like Chevron's "demand" for an impartial jury to hear the case was dropped). To fill the gaps, Chevron... procured false testimony of a "bribe" and "ghost-writing" from an obviously corrupt individual.

Page continues:

In other words, the RICO judgment is UNQUESTIONABLY founded on false evidence. Yet Kaplan, the Second Circuit, and now Parloff couldn't care less. Their hit job on Donziger is complete.

For more background on the history of dishonest pro-Chevron journalism offered by Parloff and two other legal journalists who repeatedly fanned outrage against Donziger and the Ecuadorian villagers, see this excellent blog by Kevin Koenig of Amazon Watch.

With this track record, the editors at Yahoo Finance might want to hire an extra fact checker to scrutinize Parloff's copy whenever he submits a story about the Ecuador environmental case.

Tuesday, May 16, 2017

An explosive new report that details how U.S. courts endorsed Chevron's fabricated evidence in its facially corrupt RICO case against Ecuadorian indigenous villagers presents a major test for the U.S. Supreme Court. (See this press release summarizing the report.)

The 33-page report -- called How U.S. Courts Got It Wrong In Chevron's Amazon Pollution Case -- is absolutely devastating for Chevron's bogus civil "racketeering" judgment against Ecuadorian villagers and their counsel, Steven Donziger. That judgment was issued in 2014 by U.S. trial judge Lewis A. Kaplan following a unanimous decision a year earlier by Ecuador's highest court that Chevron was liable for $9.5 billion in environmental damages.

Now, the U.S. Supreme Court will have the opportunity to reverse what a leading commentator calls the "facially corrupt" Chevron RICO case. See here for a Huffington Post analysis by Aaron Page, an experienced human rights attorney. Page helped write the new report which rebuts in great detail 12 false or distorted "findings" by Judge Kaplan that were rubber-stamped by the Second Circuit Court of Appeals, the federal appellate court in New York that oversees Kaplan.

The background of the Amazon pollution case is illustrative of Chevron's abject bad faith in dealing with its pollution problem in Ecuador and the utter failure of U.S. courts to stop the company from abusing the civil justice system to evade paying for the harm it caused. Thousands of people in the affected region have either died or face an imminent risk of death as cancer rates have skyrocketed in the area where Chevron deliberately dumped billions of gallons of toxic oil waste.

After the Ecuadorian villagers originally filed their claims in the U.S., Chevron had insisted the trial take place in Ecuador and had accepted jurisdiction there. The company at the time filed 14 sworn affidavits before a U.S. judge praising the fairness of Ecuador's courts. Chevron clearly figured it could engineer a political dismissal of the case in Ecuador, which is exactly what the company tried to do but failed.

Then, as the trial in Ecuador proceeded and the evidence against Chevron mounted, the company started to trash the very court system that it previously had praised. Chevron officials threatened the villagers with a "lifetime of litigation" if they persisted in pursuing the case. "We will fight this until hell freezes over, and then fight it out on the ice," warned Charles James, Chevron's General Counsel.

Chevron then vowed never to pay the judgment and launched a "demonization" campaign against Donziger and the villagers, of which the RICO case was a central component. To attack Donziger and his colleagues, Chevron even hired the same public relations firm that ran the Swift Boat campaign against John Kerry in the 2004 presidential campaign.

In what can only be described as a shocking example of American judicial imperialism, Kaplan let Chevron's army of private lawyers commandeer his courtroom to attack the Ecuadorians and their counsel to try to taint the Ecuador judgment so the company could evade paying the judgment. Despite its surface swagger, Chevron displayed real cowardice when it came time to actually put its RICO evidence to the test.

Company lawyers apparently had so little confidence in their "evidence" that they dropped all money damages on the eve of trial to avoid a jury of impartial fact finders. Also at Chevron's insistence, Kaplan prohibited all evidence related to Chevron's contamination and fraudulent cover-up in Ecuador from being mentioned in open court.

The entire Kaplan RICO proceeding was akin to a "Dickensian farce" as described by prominent lawyer John Keker, who withdrew from defending the case in protest of Kaplan's biased behavior. The Chevron RICO strategy against Donziger was in fact part and parcel of the company's own racketeering scheme to undermine the valid Ecuador judgment.

In fact, when Donziger brilliantly counterclaimed Chevron before Kaplan with overwhelming evidence of the company's crimes and fraud in Ecuador, the judge predictably refused to let those claims be litigated. Only Chevron's fabricated and distorted evidence was allowed to be heard; the real evidence from the villagers and Donziger was barred.

This was judicial farce, pure and simple -- what the villagers describe as a "mockery of justice" from beginning to end. To get a feel for Kaplan's inappropriate behavior and outright hostility toward the Ecuadorian villagers, read this fascinating account from Harvard Law School graduate Marissa Vahring who worked on the trial team defending the RICO case. Here's another account of Chevron's corruption from a lawyer who works at the environmental group Earth Rights International.

The latest report -- How U.S. Courts Got It Wrong -- destroys what little is left of Kaplan's and Chevron's credibility in the RICO matter.

Guerra also admitted paying and accepting bribes when he practiced law in Ecuador. "Money talks, but gold screams," Guerra told Chevron lawyers when he was negotiating his rich compensation package in exchange for becoming a company stooge. Yet Kaplan "credited" Guerra's testimony and the Second Circuit -- as is typical of appellate courts in most cases but should not have happened in this extraordinary situation -- deferred to the trial judge on this point without any independent analysis.

It later turned out that during the RICO trial, despite multiple calls for his recusal for bias, Kaplan hid the fact he had investments in Chevron. On two occasions, the Second Circuit held hearings on motions to remove Kaplan from the trial without this critical information that the judge refused to disclose. The big picture is that corporate corruption permeated Kaplan's federal courtroom to such a degree that it was almost too much for the appellate court to acknowledge, much less address.

Page stated the RICO case now presents a major test for the integrity of our highest court. "The simple question is whether the Supreme Court stand with the rule of law, or will it stand with Chevron's attacks on the rule of law," he said. Already, 19 law scholars and 17 environmental and human rights groups have weighed in with briefs urging the Court to reverse Kaplan's RICO decision.

Even if the Supreme Court declines review of Judge Kaplan's legal fiasco -- which is possible given that the Court accepts only about 75 petitions for review each year out of the thousands submitted -- the historical record of Chevron's lies and fraud is clear as the villagers proceed with asset seizure actions against the company in Canada and elsewhere. Already, Canada's Supreme Court has ruled in favor of the villagers while Brazil's courts have refused to block a separate enforcement action.

It will be interesting to watch Chevron lawyers react if they are forced to put Guerra on the stand in Canada without Judge Kaplan there to protect his credibility. Even Chevron's own lawyers might be forced by Canada's courts to explain their roles in coaching Guerra prior to his untruthful testimony in the RICO case.

Unlike Kaplan, who did all he could to rig the RICO trial in Chevron's favor, a trial judge in Toronto will assess the full evidence in an enforcement trial with neither fear nor favor. For Chevron, a neutral arbiter assessing its fabricated and distorted evidence is a recipe for a litigation disaster.